Covington does it again

One of these days, the investing prowess of the surviving Labour-sponsored Investment Fund teams will get some deserved recognition (see prior post “The great LSIF myth” July 2-08). At least if there’s any justice at Queen’s Park and in certain academic circles.

Last evening, LSIF fund manager Covington Capital won their second “VC Deal of the Year” award from the Canadian Venture Capital and Private Equity Association; that’s twice in the past three years. The portfolio company was SXC Health (SXC:TSX, SXCI:Q), a cross listed public company with revenue of about US$2 billion and a market cap of US$2.37 billion. Phil Reddon and Scott Clark held on far longer than most investors could: nine years in fact. Their unit holders enjoyed a 38.7% IRR and a 13.3x multiple of capital over the life of the $6 million deal, which harvested about $80 million in the end.

Since 2005, Med-Eng Systems, Galleon Energy, Sandvine, Aspreva Pharmaceuticals, Lakeport Brewing, Platespin and ViroChem Pharma have all been honoured by the CVCA “Deal of the Year” or “Entrepreneur of the Year” awards. Each of these successful investments had LSIF backers. Every year for the past six. I was never very good in school, at least not PhD material, but that seems like a definite trendline to me.

Congrats to Covington and the management team at SXC. One more example of how we need to kill the myth that teams investing from LSIF structures can’t succeed (see prior posts “LSIF funds see another win as Microsoft acquires Opalis” Dec 27-09 and “This is Roger Martin, reporting from Mars” Nov 25-08).

MRM
(although I’m on the CVCA board, these opinions/views are my own)